So $1.2 billion is one heck of a multiple by anyone’s standards. How did Sacks get Microsoft to go so high?

Simple. He didn’t want to sell and Microsoft needed him way more than Yammer needed Redmond, says Jason Green, the managing partner at Emergence Capital, one of Yammer’s early investors. Green is on Yammer’s board of directors.

“For Yammer, we were not looking to sell the business. We were quite happy to build that business as a great independent company. If you take that mentality, you’re in a position to negotiate from strength,” he recounts.

David Sacks had “a good relationship” with Redmond before the offer, Green says. But he even did that on his own terms. Yammer was already integrating its social chat tool with a bunch of Microsoft products, including SharePoint and Dynamics. It didn’t even need a deal with Microsoft to build those hooks.

And Yammer was just about to do the same for Microsoft Office. In April, Yammer bought OneDrum. That gave it a file-sharing tool that lets people collaborate on Office files. Shortly after that, Microsoft came calling.

The attitude at Yammer was that it could take or leave Microsoft. So Microsoft sweetened the deal to a number that no rational person could ignore—over $1 billion.

And that’s how it’s done.

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